driving growth and innovation in california’s life science ......jun 25, 2014 · venture...

CALIFORNIA ECONOMIC IMPACT REPORTDriving Growth and Innovation in California’s Life Science Industry

2014

www.califescience.org/economicreport2014

The Life Sciences in California: Evaluating the Economic Impact of Biotechnology in the Golden State

A Joint Report by BayBio and Biocom Published June 2014

Greetings from BayBio and Biocom For the past several years, both BayBio and Biocom – the life science trade associations representing the San Francisco Bay Area and the Southern California biotech clusters respectively – have published reports detailing various aspects of California’s life science industry. We are excited to endeavor for the first time to publish a joint report that details not only the overall strength of the industry in the state, but also delves deeply into region-specific data on various tenets of the life sciences – employment data, economic impact to the state, research funding, product pipelines, education and workforce preparedness, and so on. A few caveats are in order as a result of our merged efforts. First, and most importantly, comparisons to previous reports that BayBio and Biocom have participated in or published are not useful. As we have used different criteria in the past to define the life science industry in California, we had to reconcile our different definitions for this project. We have detailed the NAICS (North American Industry Classification System) codes used to define the industry in this report in the appendix. The NAICS code classifications used in this report parallel those used in the Battelle/BIO State Bioscience Industry Development report. In general, when we talk about the life science industry in this report, we include research, development, education, manufacturing, biorenewables (encompassing biofuels and bioagriculture), biopharmaceuticals, diagnostics, and medical devices; as well as the wholesale trade of the products in these categories.

Secondly, while the regional data focuses on the San Francisco Bay Area for BayBio, and the Southern California region for Biocom – that should in no way diminish the industry activity in other parts of the state. The Sacramento region is home to several bioagricultural firms, heavily clustered around UC Davis. That university, in fact, produces more baccalaureate and graduate degrees in biotech fields than any other school in the University of California system. Other parts of the state, including the Central Valley and Inland Empire, are home to manufacturing and warehousing facilities that are the lifeblood of our commercialization operations.

BayBio and Biocom are extremely proud of the history of the biotechnology industry in California – an industry that is born here, built here, and best here. It is our sincere hope that our increased collaboration on this report and, indeed, our day to day activities and public policy initiatives, will continue to bolster the position of both the Bay Area and Southern California life science clusters – and ensure that California continues to be the preeminent location in the world for life science research, development, manufacturing, and commercialization.

We invite you now to look closer at the research published here, which details vibrant economic activity, including one million jobs attributable to the life sciences in the Golden State, earning nearly $77 billion in wages, and generating more than $258 billion in economic activity.

Gail Maderis Joe Panetta President and CEO, BayBio President and CEO, Biocom

Executive Summary EMPLOYMENT The life science industry in California continues to be a major source of employment, weathering the recent economic crisis fairly well in comparison to other industries and regions. The industry directly employs 304,310 people in the state. When jobs attributable to the life sciences are factored in as well – things such as professional services, suppliers, construction, etc. – the figure climbs to over a million – 1,055,908 directly and indirectly employed as a result of California’s position as the world leader in biotechnology research and development. ECONOMIC IMPACT The life science industry accounts for a tremendous level of economic activity in the state. Including indirect and induced effects, the life science industry generates nearly $259 billion in economic activity in California. With more than one million jobs paying $76 billion in annual salaries, wages, and benefits, the industry’s employees additionally provide billions in tax revenues to state and local government. RESEARCH FUNDING Funding innovative research in the life sciences continues to be one of the greatest struggles for our industry. With an average product development timeline of more than 10 years, and costs that can exceed $1 billion, the availability of early stage capital is key for the research clusters in California to continue to grow. In 2013, California led the nation with $3,334,417,367 in NIH funding, followed by Massachusetts and New York. Venture capital, partnering deals, and other forms of private grant funding rounded out the state’s capital development portfolio strongly in 2013. Steady sales of innovative treatments provided additional resources for research and development, and revenue from alliances and royalty payments laid the foundation for future innovation to occur. 2009 2010 2011 2012 2013 2014 CA

GR Rx Sales Worldwide 27,718 29,744 30,499 34,054 38,145 44,732 10% Alliance Revenue 306 324 343 383 536 558 13% Royalty/Licensing Income 1,112 1,470 865 1,295 1,193 1,426 5% Reported R&D Expenditures 8,229 7,985 8,759 9,698 10,742 11,563 7%

Sector Jobs BioRenewables 38,964 Biopharmaceutical Manufacturing 45,514

Medical Devices & Diagnostics 80,181

Life Science Wholesale 42,374

Laboratory R&D 97,277 TOTAL JOBS 304,310

Description Impact Economic Activity $ 258,795,638,000 Attributable Jobs 1,055,908 Labor Income $ 76,487,975,000

State NIH Funding (in millions)

California $3,334 Massachusetts $2,384 New York $1,947 North Carolina $1,038 Minnesota $494 New Jersey $238

PRODUCT APPROVALS AND PIPELINE The above labor and economic activity data yielded rich fruit in the state’s product pipeline, with innovative new treatments coming to market that treat some of the most challenging unmet medical needs for patients. In 2013, California companies were awarded approval for eight new drug applications (NDA) and biologics licensing applications (BLA) from the U.S. Food and Drug Administration. That accounts for roughly a third of all approvals last year. Combined sales these products are forecast to be above $15 billion by 2018. Looking ahead, the Golden State is on track to continue this level of productivity, with a robust pipeline of new treatments in every stage of clinical and pre-clinical development. EDUCATION AND WORKFORCE PREPAREDNESS The life science industry sprang forth from California’s world-class research universities, and grew into a vibrant industry as a result of strong collaborations between academics and company researchers. That tradition continues today, and the regions with a high concentration of life science companies also enjoy high levels of educational attainment and completion.

New Drug Company Approval Type Anoro Ellipta Theravance Chemical (NDA) Breo Ellipta Theravance Chemical (NDA) Duavee Ligand

Pharmaceuticals Chemical (NDA)

Imbruvica Pharmacyclics Chemical (NDA) Kadcyla Genentech Biological (BLA)

Kynamro Isis Pharmaceuticals Biological (BLA)

Luzu Topica Pharmaceuticals Chemical (NDA) Sovaldi Gilead Sciences Chemical (NDA)

2009 2010 2011 2012 2013 Filed 28 29 48 53 45 PIII 84 77 95 83 106 PII 185 183 206 205 212 PI 145 149 150 159 156 Pre-clinical 289 282 321 324 311 Research Project 146 122 125 129 118 Total 877 842 945 953 948

Degree Attainment

Graduate Degree or Higher

Bachelor’s Degree

Associate’s Degree

Some College Completed

High School Diploma

United States 10.3% 17.6% 7.5% 20.9% 27.9% California 10.6% 18.8% 7.5% 21.8% 20.3% Bay Area 16.6% 25.1% 7.2% 19.5% 17.4% So. Cal. 10.7% 19.4% 7.9% 22.8% 19.9%

STEM Degrees

2010 2012 % Change

Bay Area 16,637 19,174 13% So. Cal. 15,823 19,204 21.4%

LOOKING AHEAD TO 2015 The life science industry in California is resilient, and enjoys strong relationships with our local, state, and federal representatives. Recent programs enacted by Governor Jerry Brown’s administration that provide sales and use tax exemptions for research and manufacturing for the life sciences will bolster the buying power of pre-commercial companies, and provide larger firms with an incentive to continue to grow in the biotech rich regions around San Diego and San Francisco. And the Governor also approved a bill that removed duplicative inspections of our facilities in the state. These initiatives provide relief for companies that are managing some of the highest infrastructure, real estate, and labor costs in the country.

Other states aggressively seek to replicate the success of our innovation clusters, and have implemented various innovative incentive structures and programs designed to aid start-up companies with targeted tax incentives, educational programs designed to prepare a workforce matched to the needs of highly technical industries, and regulatory and tort environments conducive to economic growth. BayBio and Biocom are constantly evaluating the policy choices of other states and jurisdictions, and will continue to encourage the state and our localities to enact sensible public policy that fosters continued life science growth.

At the federal level, both BayBio and Biocom have full-time staff present to manage relationships with our Congressional delegation, and to facilitate dialogue between our member companies and the various regulatory agencies that govern science funding, patent and trademark issues, and drug and device approval and reimbursement. We will continue to advocate for policies that provide predictability and transparency for product approval, enshrine fair rules for patent rights, and achieve broad patient access and reimbursement that reflects the value of the medical innovation that our products bring to the healthcare delivery system.

Finally, our associations work tirelessly to provide the tools our respective communities need to advance new and novel treatments to patients every day. Our group purchasing programs and health care trust allow pre-commercial companies to leverage buying power that they wouldn’t have otherwise – saving money, and ensuring that resources are directed toward research and development. We host a series of events throughout the year that convene thought leaders and industry experts to share best practices and encourage collaboration among commercial companies and innovative startups. And the BayBio and Biocom Institutes provide strong support for entrepreneurs and work to improve science education across the state.

We are optimistic about the future of the life science industry in California, and look forward to working with our members, industry partners, educators, and public officials to build upon the success that this report details.

Economic Impact Report – In Depth REPORT ORGANIZATION Part 1 reports the findings of our analysis of the scope and impacts of the life science industry on the State of California. Part 2 and Part 3 report on a more detailed assessment for BayBio and Biocom, respectively. Part 2 and 3 each report several research components starting with an economic overview of the region and offering data on regional economic performance, wages, population growth, and education. Next, we examine the life science industry cluster including employment trends, economic impacts, and foreign trade. In particular, this section will illustrate clusters of competitiveness and degrees of specialization when compared with national averages. In addition, we will examine the linkages between key supporting industries and the life sciences cluster to gauge the economic contribution the life science industry is making to these industries. We include a review of investment and research funding trends. The report also details performance for the component industry clusters that make up the life science industry that will be described in the Methods section below. Finally, we report the findings of our analysis of life science industry trends and component industrial clusters for individual counties in the respective service areas for BayBio and Biocom. All methodology and data sources are provided in the appendix.

DEFINING THE LIFE SCIENCE INDUSTRY CLUSTER The life science industry cluster is not static; its core attributes are innovation and evolution. Any attempt to define the life science industry must understand and embrace the latest industry trends, technologies and economic linkages. Previous research by Biocom and BayBio have used multiple methods of economic inquiry to define the industries and activities that make up the life science industry in California including Biopharmaceutical Manufacturing, Research, Development and Education Laboratories, Medical Device and Diagnostic Manufacturing, BioRenewables (including biofuels, specialty enzymes chemicals, algae research and agriculture), and Life Science Wholesale. A complete list of codes used in the analysis is provided in the Appendix to this report. In embracing the collaborative nature of this research report between the two entities, a definition of the life science industry has changed somewhat from previous studies issued by both organizations. Therefore, the findings presented in this report are not comparable to any previous studies.

Life Science Industry Component Clusters Research, Development, and Education Labs Biopharmaceutical Manufacturing Medical Devices and Diagnostic Equipment Manufacturing BioRenewables Life Science Wholesale

Statewide Data for 2013 Life Sciences Employment Using the industry definitions described above, the life science industry in California is a major generator of economic opportunity for business and residents of the Golden State. There are over 300,000 workers employed in life science companies across the state. Research, Development, and Education Labs is the biggest sector, by employment, within the life science industry representing over 97,000 statewide jobs. Medical Devices and Diagnostic Equipment Manufacturing is the second largest sector with more than 80,000 employees across California. Industry Cluster Employment BioRenewables 38,964 Biopharmaceutical Manufacturing 45,514 Medical Devices and Diagnostic Equipment 80,181 Life Science Wholesale 42,374 Research, Development, and Education Labs 97,277 TOTAL LIFE SCIENCE INDUSTRY 304,310

Source: EMSI Employment Complete, T. Clower & Associates

Economic Impacts

The life science industry generates a tremendous level of economic activity in the state. Including indirect and induced effects, the life science industry creates almost $259 billion in economic activity in California. This level of activity supports over one million jobs that pay $76 billion in annual salaries, wages, and benefits.

California’s Life Science Industry Description Impact Economic Activity $ 258,795,638,000 Labor Income $ 76,487,975,000 Employment 1,055,908

Source: EMSI Employment Complete, IMPLAN, T. Clower & Associates

Research, Development, and Education Labs

Description Impact Economic Activity $ 41,995,851,000 Labor Income $ 18,091,096,000 Employment 303,654


Biopharmaceutical Manufacturing Description Impact Economic Activity $ 124,412,617,000 Labor Income $ 30,949,889,000 Employment 328,680


Medical Devices and Diagnostic Equipment Description Impact Economic Activity $ 50,042,903,000 Labor Income $ 16,233,972,000 Employment 201,877


BioRenewables Description Impact Economic Activity $ 35,811,056,000 Labor Income $ 7,376,545,000 Employment 134,935


Life Science Wholesale Description Impact Economic Activity $ 15,557,680,000 Labor Income $ 6,233,817,000 Employment 86,762


California’s Impact on Patients

New Treatment Options for Patients California companies introduced eight innovative treatments to patients in 2013, representing roughly a third of the new molecular entities launched nationwide in 2013. It is estimate that the treatments will generate $15 billion in annual sales by 2018.

Treatment Name Company Approval Type Sovaldi Gilead Sciences Chemical (NDA)

Duavee Ligand Pharmaceuticals Chemical (NDA) Imbruvica Pharmacyclics Chemical (NDA) Kynamro Isis Pharmaceuticals Biological (BLA)

Breo Ellipta Theravance Chemical (NDA)

Anoro Ellipta Theravance Chemical (NDA) Luzu Topica Pharmaceuticals Chemical (NDA) Kadcyla Genentech Biological (BLA)

Source: 2014 EvaluatePharma®, Evaluate Ltd., www.evaluate.com

R&D Projects by Phase California’s R&D activity represents about 10 percent of the global development pipeline, and California’s innovators have consistently brought more treatments to patients than any other state. California

2009 2010 2011 2012 2013 Filed 28 29 48 53 45 PIII 84 77 95 83 106 PII 185 183 206 205 212 PI 145 149 150 159 156 Pre-clinical 289 282 321 324 311 Research Project 146 122 125 129 118 Total 877 842 945 953 948

Source: 2014 EvaluatePharma®, Evaluate Ltd., www.evaluate.com Total Market (Global)

2009 2010 2011 2012 2013 Filed 533 605 682 683 655 PIII 869 974 1,110 1,144 1,161 PII 1,589 1,865 1,952 2,059 2,047 PI 1,367 1,516 1,635 1,741 1,757 Pre-clinical 2,361 2,477 2,551 2,482 2,364 Research Project 1,151 1,221 1,511 1,548 1,642 Total 7,870 8,658 9,441 9,657 9,626


Expediting Development with Breakthrough Therapies Companies are bringing more new treatments through the development pipeline to address life threatening conditions. The Breakthrough Therapy Designation, signed into law in 2012, allowed the FDA to expedite the development and review of six California treatments. Breakthrough Therapy Designations (2013)

Product Company Therapeutic Category

Technological Category

Ledipasvir/Sofosbuvir Gilead Sciences Systemic Anti-infectives Conventional

Idelalisib Gilead Sciences Oncology & Immunomodulators Conventional

Andexanet Alfa Portola Pharmaceuticals Blood Biotechnology

Firdapse BioMarin Oncology & Conventional

Pharmaceutical/Jazz Pharmaceuticals

Immunomodulators

Mydicar Celladon Cardiovascular Biotechnology

Palbociclib Amgen/Onyx Pharmaceuticals

Oncology & Immunomodulators Conventional


Partnering For Success California based companies continue to project strong growth. Steady prescription sales have been sustained by the introduction of new innovative treatments. Revenue from alliances and royalty payments provide a foundation for future innovation to occur. The revenue, in turn, is used to fund the R&D pipeline in order to develop new treatments

2009 2010 2011 2012 2013 2014 CAGR Total WW Prescription (Rx) Sales 27,718 29,744 30,499 34,054 38,145 44,732 10% Alliance/ Co-promotion Revenue 306 324 343 383 536 558 13% Royalty & Licensing Income 1,112 1,470 865 1,295 1,193 1,426 5% Reported R&D Expenditures 8,229.2 7,985.6 8,759.5 9,698.8 10,742.8 11,563.8 7%


San Francisco Bay Area – In Depth

About BayBio

BayBio brings together the collective strength and experience of the world’s most innovative and productive life science cluster, helping companies grow, connect and advocate to solve some of humanity’s most pressing challenges. BayBio provides comprehensive support and solutions tailored to the unique needs of over 2000 Bay Area life science companies and institutions, delivering tangible value through group purchasing savings, capital access, government affairs & advocacy, networking and best-practice sharing. BayBio also supports the future of bioscience innovation through the BayBio Institute’s work in science education, career development and entrepreneurship. BayBio’s members are comprised of the scientists, inventors, entrepreneurs and leaders that have made the Bay Area the largest, most innovative and productive life science cluster in the world. Our region continues to lead the world in life science patents, new start-ups, venture capital, and NIH grant recipients. BayBio has over 500 members comprised of the diversity of organizations required to support a productive and innovative life science cluster. These organizations range from some of the world’s most promising entrepreneurial start-ups to global life science leaders as well as leading research institutions and the industry’s most seasoned investors.

History of the Life Sciences in Northern California Following in the direct entrepreneurial lead of pioneering Northern California companies like Cetus Corp, a biological engineering company - the first ever – founded in Berkeley in 1971, and Palo Alto-based Syntex Corporation, founded in 1964, a university researcher and a venture capitalist formed one of the world's most renowned biotechnology companies in 1976. Locating it in 3,000 square feet of industrial space in South San Francisco, Genentech was founded by University of California, San Francisco biochemist Herb Boyer and venture capitalist Robert Swanson. Much of the work in biotechnology's early years was done by a handful of brilliant investigators and scientists at world-class research institutes - Stanford University, UCSF, and UC Berkeley. Charged by the federal government in the early 1970’s to fight a war on cancer, researchers pushed the frontiers of genetic engineering and built more than science. They founded an industry that revolves around the Bay Area.

Silicon Valley fueled innovation to accelerate the pace of discovery. An entire industry of tool-makers and testing equipment manufacturers developed as technology, led by research done at Stanford University, drove a demand for new instruments. Later, tool companies would take techniques learned in the development of silicon chips for high tech and apply them to biotech. The new tools would be necessary for the next big revolution, and the next decade of discovery. The much-publicized Human Genome Project, begun in 1990, led to a new basis of drug research and development, from viral replication of proteins to gene-based discovery and treatment of diseases. Again, Northern California research was at the forefront, as Lawrence Livermore and Lawrence Berkeley Labs headed up the Joint

Genome Institute in Walnut Creek, playing a key role in the sequencing of the human genome, and world-leading research as UCSF would herald several more Nobel Prizes.

Bay Area research universities continue to gear up for the next wave of research. UCSF is expanding into its Mission Bay Campus, which will allow the university to perform more research projects for the NIH, and is building out QB3, a joint research program between UC Berkeley, UCSF and UC Santa Cruz. Stanford University has built the Clark Center, a multi-disciplinary building to assist in the discovery and understanding of science and medicine, and UC Berkeley is undergoing a similar transformation, expanding its college of engineering. The California Institute of Regenerative Medicine, headquartered in San Francisco, has provided funding which has fueled research and development in regenerative medicine at academic institutions and companies, and President Obama’s Brain Initiative, co-chaired by a researcher at Stanford University, is increasing CNS research in Bay Area academic centers. Additionally, the convergence of high tech and biotech is creating an explosion of opportunities in digital health. The Bay Area is uniquely positioned to lead in this rapidly growing field given the strength of its high tech and biotech industries, and the wealth of venture capital companies in Silicon Valley that have investment experience in both of these industries. Mushrooming from a small group of researchers, in less than thirty years, the life science industry in the Bay Area has grown to one of the largest and most productive clusters. REGIONAL OVERVIEW The Northern California region continues to attract new residents, which we believe is tied to the strengthening of the regional economy. Population growth in the nine-county region served by BayBio slightly outpaced both the state and nation between 2012 and 2013 adding almost 72,000 new residents. In this section, we report overall demographic and economic trends for the BayBio service area.

Regional Population, 2012 – 2013

Area 2012 2013 Change % Change US 314,349,407 316,994,057 2,644,650 0.8% California 38,029,924 38,389,747 359,823 0.9% Bay Area Region 7,313,047 7,384,840 71,793 1.0% Alameda 1,544,517 1,559,612 15,095 1.0% Contra Costa 1,078,728 1,091,343 12,615 1.2% Marin 256,731 258,493 1,762 0.7% Napa 139,393 140,746 1,353 1.0% San Francisco 819,823 826,981 7,158 0.9% San Mateo 732,836 738,843 6,007 0.8% Santa Clara 1,830,804 1,852,462 21,658 1.2% Solano 418,309 420,497 2,188 0.5% Sonoma 491,906 495,863 3,957 0.8%


With a population approaching 7.4 million, the nine-county area served by BayBio is one of the largest metropolitan areas in the country. The population increased by 1.0% between 2012 and 2013, with Santa Clara and Contra Costa counties leading the pack in growth, but all counties are growing.

The Northern California region has seen an impressive level of job growth as the state’s economy finally shakes off the worst of the effects of the Great Recession. Overall, the California economy created jobs faster than the nation (5.4% versus 5.0% from 2010 through 2013), and the region has substantially exceeded state job growth levels (8.5% versus 5.4%). Solano and Sonoma counties are lagging in job growth, but the other seven counties are moving forward nicely – not an employment boom, but good, solid growth.

Total Employment 2010 2011 2012 2013 % Change

United States 173,710,196 176,191,091 179,277,297 182,078,697 5.0% California 20,049,371 20,430,367 20,932,168 21,373,561 5.4% Bay Area Region 4,304,005 4,408,536 4,549,618 4,670,472 8.5%

Alameda 851,083 864,713 893,008 914,769 7.5% Contra Costa 469,551 477,736 489,250 498,875 6.2% Marin 174,955 179,130 183,805 186,996 6.9% Napa 87,877 89,689 92,674 95,363 8.5% San Francisco 730,966 751,990 784,323 808,559 10.6% San Mateo 451,383 466,054 483,142 497,592 10.2% Santa Clara 1,108,189 1,144,745 1,184,830 1,220,227 10.1% Solano 166,500 165,566 168,307 171,884 3.2% Sonoma 263,500 268,913 270,280 276,207 4.8%


Employment projections provided by EMSI show that all counties in the Bay Area region will add jobs through 2015 with the highest rates of growth in Napa County. These data suggest that the Northern California economy may take an economic “breather” in the next two years before resuming stronger growth.

Total Employment Projections 2013 2015 % Change United States 182,078,697 187,952,814 3.2% California 21,373,561 22,275,010 4.2% Bay Area Region 4,670,472 4,910,891 5.2% Alameda 914,769 953,157 4.2% Contra Costa 498,875 517,012 3.5% Marin 186,996 195,692 4.7% Napa 95,363 102,304 7.3% San Francisco 808,559 857,279 6.0% San Mateo 497,592 524,769 5.5% Santa Clara 1,220,227 1,293,663 6.0% Solano 171,884 178,332 3.8% Sonoma 276,207 288,683 4.5%


As one would expect with Silicon Valley and a very strong biotechnology sector, the regional economy is led in the private sector by Professional, Scientific, and Technical Services industries representing more than 12.7% of total regional employment.

Regional Employment by Major Sector Region California Unites States

NAICS Industry 2013 Jobs % 2013 Jobs % 2013 Jobs %

11 Agriculture, Forestry, Fishing 29,725 0.6% 501,943 2.3% 3,503,606 1.9%

21 Mining 8,658 0.2% 63,932 0.3% 1,444,629 0.8% 22 Utilities 13,362 0.3% 61,230 0.3% 575,666 0.3% 23 Construction 211,007 4.5% 946,475 4.4% 9,071,042 5.0% 31 Manufacturing 328,058 7.0% 1,334,084 6.2% 12,633,693 6.9% 42 Wholesale Trade 135,845 2.9% 776,128 3.6% 6,317,323 3.5% 44 Retail Trade 391,031 8.4% 1,947,911 9.1% 18,073,425 9.9% 48 Transportation/ Warehousing 111,664 2.4% 612,655 2.9% 5,899,771 3.2% 51 Information 153,671 3.3% 535,421 2.5% 3,303,902 1.8% 52 Finance and Insurance 247,494 5.3% 1,075,314 5.0% 10,254,115 5.6% 53 Real Estate 288,932 6.2% 1,291,459 6.0% 8,429,239 4.6% 54 Professional, Scientific Services 591,465 12.7% 1,832,817 8.6% 12,508,449 6.9%

55 Management of Companies 72,889 1.6% 229,961 1.1% 2,251,376 1.2%

56 Administrative Services 267,009 5.7% 1,378,787 6.5% 11,313,578 6.2% 61 Education (Private) 139,911 3.0% 492,068 2.3% 4,448,949 2.4%

62 Health Care / Social Assistance 482,243 10.3% 2,250,907 10.5% 20,360,545 11.2%

71 Arts, Entertainment 127,094 2.7% 577,788 2.7% 4,036,407 2.2%

72 Lodging and Food Services 336,568 7.2% 1,502,383 7.0% 12,992,932 7.1%

81 Other Services 252,333 5.4% 1,289,424 6.0% 10,349,675 5.7%

90 Government 470,720 10.1% 2,615,530 12.2% 24,117,047 13.2% 99 Unclassified Industry 10,794 0.2% 57,343 0.3% 193,328 0.1% Total 4,670,472 21,373,561 182,078,697


In keeping with a highly skilled workforce, wages in the region are high and average, more than 25% above statewide averages. San Francisco County has average wages exceeding $100,000 per year across all industries.

Wages (Total Average Wages All Industries) Average Annual Wages United States $58,117 California $77,845 Bay Area Region $64,505 Alameda $61,512 Contra Costa $57,476 Marin $51,592 Napa $84,542 San Francisco $101,640 San Mateo $58,117 Santa Clara $95,726 Solano $54,507 Sonoma $46,444


Education attainment in the Bay Area region is among the highest in the nation with more than 40% of the population possessing at least a Bachelor’s degree. Possessing a highly skilled workforce is one of the region’s greatest strengths. Moreover, the number of graduates of college programs continues to rise with total degree completions rising by 2% from 2010 to 2012, the latest year for which data are available. Importantly, the region is also producing college graduates with technical degrees supporting the attraction and growth of industry, especially biotechnology. Between 2010 and 2012, total degrees in STEM (science, technology, engineering, and math), rose by 13% feeding the demand for a highly skilled labor force.

Educational Attainment, 2013

Graduate Degree or

Higher

Bachelor’s Degree


Some College

High School Diploma

United States 10.3% 17.6% 7.5% 20.9% 27.9%

California 10.6% 18.8% 7.5% 21.8% 20.3%

Bay Area Region 16.6% 25.1% 7.2% 19.5% 17.4%

Alameda 12.4% 20.8% 8.6% 23.0% 19.0%

Contra Costa 12.0% 23.2% 7.6% 20.8% 17.4%

Marin 6.7% 12.9% 7.4% 25.5% 24.8%

Napa 9.7% 19.5% 9.0% 24.3% 19.2%

San Francisco 20.3% 31.3% 5.4% 15.1% 13.3%

San Mateo 16.8% 26.6% 7.6% 19.3% 16.9%

Santa Clara 19.8% 25.8% 7.1% 17.1% 15.7%

Solano 7.2% 16.2% 9.8% 27.7% 24.3%

Sonoma 11.6% 20.2% 8.3% 25.9% 19.0%


The region’s institutions of higher education continue to produce the labor force needed to sustain economic growth and development. Total degree and certificate completions increased by 2.3% between 2011 and 2012, the latest year for which data are available. Of particular note is San Mateo County that saw a surge in degree completions between 2011 and 2012.

Total Completions by County County 2011 2012 % Change Alameda 27,716 27,651 -0.23% Contra Costa 6,417 6,854 6.81% Marin 911 936 2.74% Napa 1,208 1,134 -6.12% San Francisco 20,804 21,032 1.10% San Mateo 3,023 3,790 25.37% Santa Clara 26,453 27,171 2.71% Solano 2,005 2,084 3.94% Sonoma 7,140 7,115 -0.35% Bay Area Total 95,380 97,569 2.30%


Impressively, the region is increasing the number of degree and program graduations in Science, Technology, Math and Engineering disciplines, which are critical to the future success of region to continue to attract investment in the life science sector. Between 2010 and 2012, total STEM degree completions increased by 13% rising to more than 19,000 graduations in the most recent reporting period.

STEM Completions by County 2010 2012 % Change Alameda 7,200 8,066 11% Contra Costa 332 519 36% Marin 110 156 29% Napa 179 183 2% San Francisco 1,915 2,208 13% San Mateo 155 268 42% Santa Clara 5,896 6,787 13% Solano 352 377 7% Sonoma 498 610 18% Total 16,637 19,174 13%


LIFE SCIENCES Northern California’s life science cluster provided almost 100,000 jobs in 2013, an increase of 1,900 jobs over 2012. The largest concentrations of these jobs are in Alameda, San Mateo, and Santa Clara counties accounting for about two-thirds of all life science jobs in the region.

Life Science Employment by County, 2012 - 2013 2012 2013 2013 Avg Earnings Alameda 22,123 22,839 $62,644 Contra Costa 5,488 5,591 $95,841 Marin 1,099 1,093 $101,125 Napa 1,329 1,324 $67,608 San Francisco 13,654 13,634 $114,691 San Mateo 16,310 16,570 $125,218 Santa Clara 29,666 30,269 $68,567 Solano 4,450 4,587 $93,674 Sonoma 3,885 3,997 $52,677 Region 98,004 99,904 $79,437

Life Science Employment by County, 2013


The manufacture of medical and diagnostic devices is a major contributor to Northern California’s life science industry, with Biopharmaceutical Manufacturing also being an important regional employer. The largest contribution to regional employment is the Research, Development, and Education Labs cluster that includes private sector and university laboratories and supporting education programs.

Life Sciences Employment by Sector, 2012 – 2013

2012 2013 Change 2012-2013 2015

BioRenewables 2,133 2,194 61 2,010 Biopharmaceutical Manufacturing 17,491 17,729 238 19,441

Medical Devices and Diagnostics 22,631 23,169 538 21,696 Life Science Wholesale 4,661 5,026 365 5,068 Research, Development, and Education Labs 51,088 51,786 698 55,156 Total 98,004 99,904 1,896 103,371


There are more than 2,000 companies operating in the life sciences industry in the BayBio service area spanning the continuum of small, medium, and large firms.

All Life Science Establishments, 2013 Establishments

Alameda 401 Contra Costa 162

Marin 66 Napa 47

San Francisco 234 San Mateo 267

Santa Clara 621 Solano 81

Sonoma 150 Region 2027


Wages in the life science industry cluster are relatively high, though there is a great deal of variance among the Northern California counties and among the sectors that make up the life science industry. Wages in the Biopharmaceutical Manufacturing industry in Alameda County average over $126,359 per year, while employees in the Research, Development, and Education Labs cluster in Sonoma County earn just under $53,000 annually.

Wages by Sector and County, 2013

BioRenewables Biopharmaceutical Manufacturing

Medical Devices

Life Science Wholesale

R&D Labs

Alameda $38,478 $126,359 $105,478 $74,359 $79,786

Contra Costa $68,968 $96,224 $76,926 $81,210 $88,284

Marin $33,745 $187,115 $71,437 $69,677 $64,441

Napa $38,507 $94,482 $59,699 $42,050 $77,448

San Francisco $34,272 $351,211 $85,088 $155,553 $81,541

San Mateo $40,838 $218,201 $144,281 $111,898 $174,066

Santa Clara $37,374 $150,398 $134,953 $114,686 $102,233

Solano $37,924 $202,832 $56,854 $47,812 $77,497

Sonoma $34,205 $46,670 $109,794 $77,547 $52,677


Regional Competitive Advantage

Based on our analysis of regional location quotients, the Bay Area region is a major hub for Biopharmaceutical Manufacturing, Medical Devices and Diagnostics manufacturing, and Research, Development, and Education Lab activities. Employment projections for 2015 suggest the regional competitive advantage of the Bay Area will generally increase through 2015.

Industries with strong LQs (those greater than 1.2) are often indicative of a regional competitive advantage that would support additional growth and opportunity. Industries with low LQs (those less than 0.9) indicate goods and services that are likely imported into the region and therefore could represent opportunities for business development and recruitment.

Location Quotient for Region by Industry Cluster 2013 2015 Research, Development, and Education Labs 0.9 1.0 Biopharmaceutical Manufacturing 2.7 2.9 Medical Devices and Diagnostic Equipment 3.3 3.1 BioRenewables 0.8 0.7 Life Science Wholesale 0.6 0.6 Total Life Science Industry 2.2 2.3


By examining the Location Quotient by industry cluster and county, we can see the diversity in the life science industries in the BayBio service area. Napa, Solano, and Sonoma counties are hubs of BioRenewable activities. San Mateo and Solano dominate for Biopharmaceutical Manufacturing. San Mateo, Santa Clara, and Alameda are the strongest regional locations for Medical Devices manufacturing. The Life Science Wholesale sector is underrepresented in the BayBio area with only Santa Clara County showing a location quotient greater than one. San Mateo County also shows the greatest concentration of Research Labs, though Alameda, Contra Costa, Marin, Santa Clara, and Solano are all very strong in this section of the life science industry.

Shift Share Analysis

A shift share analysis is another analytic technique useful for assessing the relative strength of a given industry in a regional economy over time. Here we report two statistics, the Expected Change and the Competitive Effect. The Expected Change is the number of jobs that theoretically would have increased, or decreased, between 2010 and 2013 if the local industry followed national economic trends. The competitive effect shows the number of jobs to have been added, or subtracted, because of business characteristics of the regional economy. Based on this analysis, even though there has been overall growth, the region’s overall competitiveness has been challenged in Medical Devices, while growth performance remains strong in Biopharmaceutical Manufacturing.

All Life Science Shift Share Analysis, 2010 - 2013 Expected Change Competitive Effect Research, Development, and Education Labs 599 202 Biopharmaceutical Manufacturing 141 1,717 Medical Devices and Diagnostic Equipment 686 -1,598 BioRenewables -2 -182 Life Science Wholesale 240 -86 Region 1,668 51


LIFE SCIENCE ECONOMIC IMPACTS Based on the IMPLAN economic input-output model, the life science industry cluster in the BayBio service region generated $95 billion in total regional economic activity in 2013. This economic activity supported 300,000 regional jobs paying in excess of $29 billion in annual salaries, wages, and benefits.

Economic Impacts Economic Activity Labor Income Jobs Alameda $13,407,362,000 $4,166,434,000 53,821 Contra Costa $2,966,629,000 $908,947,000 11,366 Marin $416,534,000 $130,063,000 1,913 Napa $724,094,000 $181,317,000 2,731 San Francisco $3,741,242,000 $1,402,055,000 20,955 San Mateo $30,731,881,000 $8,236,406,000 57,339 Santa Clara $15,464,075,000 $5,874,848,000 58,486 Solano $8,758,796,000 $1,992,299,000 17,545 Sonoma $1,900,170,000 $565,203,000 8,700 Bay Area Region $95,003,472,000 $29,711,888,000 300,073

Sources: EMSI Employment Complete, IMPLAN, T. Clower & Associates

The life science industry cluster generates almost $2.8billion in economic activity among its key support industries in the Bay Area region, supporting over 6,800 related jobs.

Economic Activity in Key Support Industries

Acct. &

Tax Prep.

Insurance Legal Svcs.

Bus. Admin.

Financial Svcs.

Mktg., Ad.,

Comm.

Real Estate

Alameda $32,368,456 $20,762,420 $80,261,251 $19,905,728 $51,021,088 $64,874,785 $267,472,186 Contra Costa $9,080,474 $7,021,407 $17,636,711 $6,092,629 $19,748,928 $9,966,266 $59,964,797 Marin $1,484,266 $408,216 $2,469,377 $817,329 $1,545,605 $3,934,337 $7,462,928 Napa $1,919,098 $496,813 $3,700,603 $1,236,827 $1,089,092 $664,198 $17,694,169 San Francisco $7,252,419 $4,249,190 $16,115,927 $4,276,254 $8,090,459 $19,736,112 $37,824,162 San Mateo $87,116,619 $29,391,017 $186,634,411 $62,218,875 $204,808,853 $79,270,670 $470,920,942 Santa Clara $62,849,489 $16,282,935 $117,953,271 $28,870,397 $87,630,723 $24,981,082 $301,788,344 Solano $6,099,270 $5,449,087 $9,968,023 $13,188,233 $37,648,910 $16,036,270 $89,306,681 Sonoma $8,502,284 $3,220,684 $8,634,021 $1,712,786 $11,428,551 $3,994,573 $47,400,539 Total $216,672,376 $87,281,769 $443,373,594 $138,319,057 $423,012,207 $223,458,295 $1,299,834,748

Source: IMPLAN

Employment in Key Support Industries

Acct. &

Tax Prep.

Insurance Legal Svcs.

Bus. Admin.

Financial Svcs.

Mktg., Ad.,

Comm.

Real Estate

Alameda 246 129 355 149 90 423 1,311 Contra Costa 72 41 90 61 35 74 336

Marin 10 2 14 6 3 27 45 Napa 19 2 20 13 2 7 108

San Francisco 48 18 71 18 11 105 115 San Mateo 626 157 722 351 214 532 2,578 Santa Clara 337 120 365 136 118 151 1,551

Solano 97 52 77 112 78 210 508 Sonoma 100 24 52 16 25 45 308

Total 1,554 545 1,767 863 575 1,573 6,860 Source: IMPLAN

RESEARCH, DEVELOPMENT, AND EDUCATION LAB SERVICES Well over 50,000 individuals are employed in the Research, Development, and Education Labs sector in Northern California for 2013, indicating a small increase over 2012. Average annual earnings per worker exceed $95,000 with the highest wages being paid in Santa Clara and San Mateo counties.


Featured Employers: Research, Development, and Education Labs Company Employees

Lawrence Berkeley National Laboratory 6,000 SRI International 1,430 Gladstone Institutes 450 InterMune, Inc. 249 Buck Institute for Age Research 230 Five Prime Therapeutics 120 Exelixis, Inc. 101 Raptor Pharmaceuticals, Inc. 100 Oncomed Pharmaceuticals 80 ChemoCentryx, Inc. 70 Sutro Biopharma, Inc. 58 Ultragenyx Pharmaceuticals 27

Source: Hoover’s, BayBio

Sector Snapshot Description Value

2013 Employees 51,787 2013 Avg Earnings $95,189 2013 Establishments 998

Research, Development, and Education Labs firms and institutions in the BayBio service area generate over $15 billion in regional economic activity, support 92,000 total jobs, and boost area labor income by almost $7 billion.

Economic Impacts Economic Activity Labor Income Jobs Alameda $2,868,179,000 $1,204,169,000 20,405 Contra Costa $726,605,000 $317,495,000 4,620 Marin $135,939,000 $55,180,000 1,092 Napa $101,720,000 $46,032,152 743 San Francisco $2,348,273,000 $985,437,000 17,777 San Mateo $1,569,520,000 $770,459,000 8,289 Santa Clara $4,675,492,000 $2,363,040,000 26,159 Solano $199,166,000 $85,189,000 1,427 Sonoma $269,310,000 $105,570,000 2,271 Region $15,427,942,000 $6,994,350,000 92,121


BIOPHARMACEUTICAL MANUFACTURING The Biopharmaceutical Manufacturing industry sector in the Bay Area region employs over 17,700 workers with average annual earnings exceeding $163,000.

Featured Employers: Biopharmaceutical Manufacturing

Company Employees Genentech, Inc. 10,000 Gilead Sciences, Inc. 3,000 BioMarin Pharmaceuticals 500 Boehringer Ingelheim 375 Bayer Healthcare Pharmaceuticals 300 Depomed, Inc. 267 Theravance Biopharma US, Inc. 250 Corium International, Inc. 150 Medical Analysis Systems, Inc. 150 Durect Corporation 89

Source: Hoovers, BayBio


2013 Employees 17,730

2013 Avg Earnings $163,721

2013 Establishments 131

Biopharmaceutical companies in the BayBio region spark $63.7 billion in annual economic activity. Impressively, there are almost eight jobs in the regional economy supported for each Biopharmaceutical Manufacturing sector job.

Economic Impacts Economic Activity Labor Income Jobs Alameda $6,675,424,177 $1,640,476,305 17,556 Contra Costa $986,997,541 $244,496,301 2,443 Marin $209,684,796 $47,468,914 437 Napa $510,788,141 $92,162,251 1,031 San Francisco $1,318,190,359 $367,915,137 2,384 San Mateo $29,651,992,211 $7,253,007,757 45,038 Santa Clara $3,135,956,197 $749,207,998 6,600 Solano $9,058,584,500 $1,981,844,967 15,841 Sonoma $142,577,355 $27,145,074 456 Region $63,689,205,925 $16,939,223,433 139,778


MEDICAL DEVICES AND DIAGNOSTIC EQUIPMENT The Medical Devices and Diagnostics equipment manufacturing sector in Northern California added just over 500 jobs between 2012 and 2013 bringing total employment in the sector to 23,169. This industry cluster is concentrated in Santa Clara County and Alameda County, with Contra Costa, San Mateo, and Sonoma counties all making important contributions.

Featured Employers: Medical Devices and Diagnostic Equipment Company Employees

Varian Medical Systems, Inc. 2,110 Medtronic Cardiovascular 1,200 LifeScan, Inc. 1,000 Cepheid 500 Thermo Finnigan LLC 500 Agilent Technologies, Inc. 500 Acclarent, Inc. 400 Penumbra, Inc. 400 Roche Molecular Systems, Inc. 400 Abbott Diabetes Care, Inc. 250 CardioDx, inc. 229 Natera, Inc. 215 Ariosa Diagnostics, Inc. 140 Veracyte, Inc. 100 Biocare Medical 99 Fluidigm 75




The Medical Devices and Diagnostic Equipment manufacturing cluster generates $17.9 billion in annual regional economic activity in Northern California supporting almost 62,000 jobs that pay $6.1 billion in salaries, wages, and benefits.

Economic Impacts Economic Activity Labor Income Jobs Alameda $4,083,605,939 $1,337,024,003 14,931 Contra Costa $849,919,994 $271,106,962 3,183 Marin $12,893,726 $4,836,789 72 Napa $66,320,089 $19,608,914 294 San Francisco $29,489,061 $11,706,348 223 San Mateo $1,628,132,921 $629,582,905 4,968 Santa Clara $7,272,636,122 $2,560,050,450 22,720 Solano $84,028,914 $25,666,120 398 Sonoma $1,028,041,228 $348,159,347 4,077 Region $17,878,927,356 $6,118,543,895 61,957


BIORENEWABLES The Northern California region served by BayBio employs 2,194 workers in the BioRenewables sector, up slightly from 2012. These jobs are concentrated in Sonoma, Napa, and Santa Clara counties. Average wages in the sector exceed $40,000 per year across the region.

Even with an overall increase in total employment for this sector, the region lost some ground to other areas with only Contra Costa County showing a gain in the competitive effect component of a shift-share analysis.

Featured Employers: BioRenewables Business Name Employees Amyris, Inc. 392 Solazyme 250 Dupont Industrial Sciences 200 Codexis, Inc. 125 Calera Corporation 49 Kiverdi 24 Micromidas 28 Arcadia Biosciences 74 Siluria 49




The BioRenewables industry cluster in Northern California generates almost $1.8 billion in regional economic activity, boosts total labor income by $316 million, and supports almost 5,600 total direct, indirect, and induced jobs.

Economic Impacts Economic Activity Labor Income Jobs Alameda $167,077,225 $28,452,451 434 Contra Costa $412,608,604 $57,238,880 713 Marin $23,895,312 $4,590,507 69 Napa $89,504,351 $31,405,201 738 San Mateo $89,327,995 $14,395,737 369 Santa Clara $69,546,457 $12,262,829 479 Solano $90,315,398 $12,991,525 345 Sonoma $509,538,038 $96,862,123 1,906 Region $1,795,789,013 $316,240,536 5,579


LIFE SCIENCE WHOLESALE The Life Science Wholesale sector added 361 jobs between 2012 and 2013. About 60% of total regional employment in this industry sector is located in Alameda and Santa Clara counties.

Featured Employers: Life Science Wholesale

Company Employees

McKesson Corporation 1,405 Carl Zeiss Meditec, Inc. 705 The Doctors Company 700 Kinsale Holdings, Inc. 250 Nds Surgical Imaging, LLC 215 Lumenis Inc. 150 Angioscore Inc. 140 Intake Initiatives Inc. 110 Tradecom Medical Transcription, Inc. 110

Source: Hoover’s



BayBio’s Life Science Wholesale cluster creates $2.3 billion in regional economic activity each year boosting total area employment by over 11,000 jobs.

Economic Impacts Economic Activity Labor Income Jobs Alameda $398,592,504 $167,629,467 2,165 Contra Costa $147,564,610 $60,803,284 744 Marin $55,032,709 $23,327,802 284 Napa $4,138,202 $1,759,054 23 San Francisco $157,265,662 $66,715,729 730 San Mateo $238,799,273 $101,553,173 1,127 Santa Clara $1,015,219,416 $440,806,218 4,144 Solano $54,289,172 $22,654,322 339 Sonoma $48,540,121 $20,255,289 311 Region $2,335,339,927 $964,196,071 11,038


Foreign Trade The products and services produced in the life science industry in the BayBio region are consumed across the country and around the world. Our estimates for 2013 show that foreign exports of life science goods and services produced in Northern California totaled more than $9.6 billion.

Value of Foreign Exports by Sector and County ($000s)

BioRenewables

Biopharm. Manufact.

Med Dev. &

Diagnostic LS Trade R&D

Total

Alameda $15,951 $305,594 $816,194 $730,573 $17,079 $1,885,391 Contra Costa $58,894 $60,004 $279,104 $189,629 $6,435 $594,066 Marin $3,341 $8,455 $4,898 $56,525 $2,006 $75,225 Napa $20 $70,352 $13,902 $33,634 $594 $118,502 San Francisco $6,557 $19,091 $10,733 $288,920 $14,783 $340,084 San Mateo $5,347 $1,973,673 $252,650 $249,807 $12,542 $2,494,019 Santa Clara $19,901 $448,868 $1,740,893 $1,046,914 $29,548 $3,286,124 Solano $9,997 $389,819 $21,321 $66,711 $844 $488,692 Sonoma $26,606 $20,039 $207,464 $124,517 $2,331 $380,957 Region $146,614 $3,295,895 $3,347,159 $2,787,230 $86,162 $9,663,060

Source: IMPLAN, T. Clower & Associates

Venture Capital and Research Funding Total venture capital funding is growing, which bodes well for growth in the life science industry. In addition, the region attracted over $1.3 billion in research grants from the National Institute of Health (NIH) in fiscal year 2013.

San Francisco Region Venture Capital Investment, 2009 – 2013

Source: National Venture Capital Association, Money Tree Report

National Institute of Health (NIH) Funding by County, 2013

$0 $500,000,000

$1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000 $3,500,000,000 $4,000,000,000

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Qtr 1

Qtr 2

Qtr 3

Qtr 4

2009 2010 2011 2012 2013

County NIH Funding FY2013 Alameda $237,144,691 Contra Costa $643,005 Marin $11,656,311 San Francisco $618,001,372 San Mateo $65,001,102 Santa Clara $407,479,963 Solano $1,462,640 Sonoma $1,476,278 Total $1,342,865,362

Source: NIH

Top Grant Receiving Institutions (receiving more than $1.3 million) Organization Funding Awards University of California San Francisco $501,656,900 1174 Stanford University $357,812,990 828 University of California Berkeley $119,785,503 357 SRI International $42,623,685 84 Kaiser Foundation Research Institute $36,647,504 67 University of California-Lawrence Berkeley Lab $27,116,291 45 J. David Gladstone Institutes $26,575,146 46 Northern California Institute/Research/Education $24,887,721 47 Palo Alto Institute For Research & Education, Inc. $16,141,630 43 University of California, San Francisco $15,484,153 12 Children's Hospital & Res Center at Oakland $14,238,224 29 Blood Systems Research Institute $11,044,343 9 Buck Institute For Research on Aging $10,473,643 34 California Pacific Medical Center Research Institute $10,012,814 15 Public Health Institute $6,070,096 15 Xoma Corporation $5,969,753 1 San Francisco State University $5,955,274 20 Aridis Pharmaceuticals, LLC $5,784,673 2 Cancer Prevention Institute of California $4,362,038 7 Wave 80 Biosciences, Inc. $3,603,350 6 Tunitas Therapeutics, Inc. $2,831,128 3 Savant Hwp, Inc. $2,507,295 1 Palo Alto Medical Foundation Research Institute $2,416,766 6 Smith-Kettlewell Eye Research Institute $2,387,278 7 Planet Biotechnology, Inc. $2,285,731 4 University of California Lawrence Livermore National Lab $2,268,153 3 Afasci, Inc. $2,052,768 5 Ernest Gallo Clinic and Research Center $2,010,883 7 Scientific Analysis Corporation $1,790,890 4 Sociometrics Corporation $1,760,541 5 Cellerant Therapeutics, Inc. $1,689,823 2 Collaborative Drug Discovery, Inc. $1,542,180 5 Cellsight Technologies, Inc. $1,499,971 1 Touro University f California $1,462,640 4 San Jose State University $1,428,290 9 Phoenix Biosystem, Inc. $1,355,176 3 Profusa, Inc. $1,322,713 3

Source: NIH

Southern California – In Depth

About Biocom With over 600 members across all sectors of the life sciences, Biocom is the nonprofit trade association for Southern California representing public and private industry, academia and research institutes, service providers and patient advocacy organizations. Biocom was launched in 1992 when San Diego’s biotechnology start-ups realized that they needed a strong and united voice to advocate for local and regional policies conducive to industry growth and regional economic development. Twenty years later, Biocom continues to provide public policy support in city halls, in Sacramento and on Capitol Hill, where it partners with peer industry groups from across the nation. Now, in addition to advocacy, Biocom saves its members money through group purchasing, and provides numerous workforce development programs that allow current employees to enhance their skills and help train the next generation of workers – creating a sustainable, highly-skilled workforce in the region that is increasingly a model for regional economics across the globe. Biocom is also a premier networking organization, hosting over 75 events a year. Capital development for the region is a major goal, and Biocom works with member companies on a number of initiatives designed to accelerate development in the life science sector.

History of Life Science Industries in Southern California What began more than 35 years ago with a single biotechnology startup has evolved into one of the world’s largest life science hubs. Several major forces put the region on the map: scientific breakthroughs out of the research institutes on the Torrey Pines Mesa and in and around Irvine, the successful establishment of the region’s first true biotechnology company, Hybritech, and the growth of the medical device industry in both San Diego and Orange counties.

Scientists out of UC San Diego founded San Diego-based Hybritech. The company’s signature product, a diagnostic test for prostate cancer – the PSA test – and the company’s acquisition by pharmaceutical giant Eli Lilly for $400 million cash in 1986, created the first generation of Southern California biotechnology entrepreneurs with the finances and connections to start new companies.

Those entrepreneurs went on to form and nurture scores of biopharmaceutical and medical device start-ups, including San Diego’s biggest biotech drug success story, Idec, which is now part of Biogen-Idec.

In Orange County, the medical device industry’s story of growth began much as it did in San Diego County. Scientists and engineers originally attracted to the region for military research and manufacturing jobs began to translate basic bioscience research from the surrounding labs and universities into potential products. Edwards Lifesciences, founded in Santa Ana in the late 1950s, anchored the device cluster to the north. It, too, graduated a new generation of entrepreneurs who started their own companies in Orange County. Meanwhile, Allergan, an Irvine eye drug company also

founded in the 1950s, began to move into the new field of biotechnology in the late 1980s, with the acquisition of Botox.

During these same years, funding for basic science from the National Institutes of Health began to grow, and the science in both Torrey Pines and the UC Irvine area started leaping ahead. Today, more than two dozen research institutes, universities and colleges in Southern California conduct basic scientific research or train future generations of scientists, entrepreneurs and life science workers.

As the industry has grown, so has the infrastructure to support it. Southern California is home to law firms, accountants, real estate firms, equipment suppliers and public relations firms that specialize in the life sciences. This critical mass of research, entrepreneurs, support services and private investors savvy about the risks and long incubation periods for life science products acts as a magnet to attract even more life science activity to the region.

While the life science industry in San Diego and the Orange County towns of Irvine and Mission Viejo have built global reputations for their prowess, the industry has also been taking root in Riverside County. There, Abbott Vascular and other medical device manufacturers take advantage of a more affordable housing market and proximity to a talented regional work force. This “neighborhood” in the region’s cluster stands to become even more powerful with the opening of UC Riverside’s School of Medicine.

And to the east in Imperial County, long known for its agricultural heritage, new life science sectors such as industrial biotechnology and biofuels are creating opportunities for new jobs and new relationships.

This sprawl of life-saving innovation makes Southern California a case study for investing millions of dollars to foster the creation of biotechnology clusters and the growth of well-paying jobs. The industry that generates cures and therapies for society’s most devastating diseases is also developing alternative energy technologies to replace fossil fuels and chemicals that degrade the environment. A major economic driver in Southern California, this is the type of industry that economic development agencies around the world covet: it is clean and it stimulates the economy with a well-paid, well-educated workforce that demands excellent schools and plenty of first-rate cultural opportunities.

REGIONAL OVERVIEW Southern California continues to outpace the state and nation in population growth. The four-county region represented by Biocom added more than 120,000 new residents between 2012 and 2013, a growth rate of about 1.4%. Riverside County showed the fastest growth in absolute and percentage change adding over 49,000 new residents for a growth rate of 2.1%. Population, 2012 – 2013 Area 2012 2013 Change % Change United States 314,349,407 316,994,057 2,644,650 0.8%

California 38,029,924 38,389,747 359,823 0.9% San Diego 3,175,600 3,212,098 36,498 1.1% Orange 3,081,502 3,109,108 27,606 0.9% Riverside 2,290,516 2,339,589 49,073 2.1% Imperial 180,350 183,671 3,321 1.8% Region 8,724,101 8,844,466 120,365 1.4%

Source: EMSI Employment Complete, T. Clower & Associates Southern California has now shown several years of steady job growth as the economic recovery solidified. Between 2010 and 2013, regional employment grew by 6.4% adding about 290,000 jobs. Orange County has lead the way with ^.6% employment growth, but all counties in the Biocom region are showing steady, if not rapid, job growth. Total Employment

2010 2011 2012 2013 ’10-‘13

% Change United States 173,710,196 176,191,091 179,277,297 182,078,697 5.0% California 20,049,371 20,430,367 20,932,168 21,373,561 6.6% Region 4,532,808 4,614,374 4,720,421 4,824,946 6.4% Imperial 73,153 72,879 75,850 77,455 5.8% Orange 1,851,623 1,889,900 1,932,942 1,974,520 6.6% Riverside 808,249 825,511 846,584 872,766 8.0% San Diego 1,799,784 1,826,083 1,865,044 1,900,205 5.6%

Source: EMSI Employment Complete, T. Clower & Associates The Southern California economy’s structure closely mirrors the state demonstrating excellent industrial diversification.

Regional Employment by Major Sector Region California Unites States

NAICS Industry 2013 Jobs % 2013 Jobs % 2013 Jobs %

11 Agriculture, Forestry, Fishing 47,309 1.0% 501,943 2.3% 3,503,606 1.9%

21 Mining 8,372 0.2% 63,932 0.3% 1,444,629 0.8% 22 Utilities 13,516 0.3% 61,230 0.3% 575,666 0.3% 23 Construction 249,659 5.2% 946,475 4.4% 9,071,042 5.0% 31 Manufacturing 312,862 6.5% 1,334,084 6.2% 12,633,693 6.9% 42 Wholesale Trade 167,791 3.5% 776,128 3.6% 6,317,323 3.5% 44 Retail Trade 461,148 9.6% 1,947,911 9.1% 18,073,425 9.9% 48 Transportation/ Warehousing 98,345 2.0% 612,655 2.9% 5,899,771 3.2% 51 Information 72,364 1.5% 535,421 2.5% 3,303,902 1.8% 52 Finance and Insurance 283,346 5.9% 1,075,314 5.0% 10,254,115 5.6% 53 Real Estate 335,220 6.9% 1,291,459 6.0% 8,429,239 4.6%

54 Professional, Scientific Serv 417,577 8.7% 1,832,817 8.6% 12,508,449 6.9%

55 Management of Companies 51,826 1.1% 229,961 1.1% 2,251,376 1.2%

56 Administrative Services 338,457 7.0% 1,378,787 6.5% 11,313,578 6.2% 61 Education (Private) 90,285 1.9% 492,068 2.3% 4,448,949 2.4%

62 Health Care / Social Assistance 450,103 9.3% 2,250,907 10.5% 20,360,545 11.2%

71 Arts, Entertainment 129,053 2.7% 577,788 2.7% 4,036,407 2.2%

72 Lodging and Food Services 376,855 7.8% 1,502,383 7.0% 12,992,932 7.1%

81 Other Services 274,697 5.7% 1,289,424 6.0% 10,349,675 5.7%

90 Government 634,077 13.1% 2,615,530 12.2% 24,117,047 13.2% 99 Unclassified Industry 12,082 0.3% 57,343 0.3% 193,328 0.1% Total 4,824,946 21,373,561 182,078,697


Job growth in the Biocom region will likely accelerate slightly over the next two years with an expectation of about 200,000 new jobs. In percentage terms, Riverside and Imperial County are expected to lead employment growth through 2015. Total Employment Projections 2013 2015 % Change United States 182,078,697 187,952,814 3.2% California 21,373,561 22,275,010 4.2% Region 4,824,946 5,025,194 4.2% San Diego 1,900,205 1,968,647 3.6% Orange 1,974,520 2,051,354 3.9% Riverside 872,766 923,422 5.8% Imperial 77,455 81,771 5.6%

Source: EMSI Employment Complete, T. Clower & Associates Wages in the region average $66,000 per year, which is substantially above US averages, but below state averages. Wages (Total Average Wages All Industries) Average Annual Wages United States $62,591 California $72,760 Region $66,092 Imperial $49,397 Orange $69,556 Riverside $51,941 San Diego $69,328


Southern California retains its competitive advantage in education attainment by residents with 38% having a post-secondary degree, compared to 35% for the nation. 2013 Educational Attainment

Graduate Degree or

Higher

Bachelor’s Degree


Some College

High School Diploma

San Diego 12.4% 20.8% 8.6% 23.0% 19.0%

Orange 12.0% 23.2% 7.6% 20.8% 17.4%

Riverside 6.7% 12.9% 7.4% 25.5% 24.8%

Imperial 4.0% 8.7% 6.1% 19.8% 19.9%

Region 10.7% 19.4% 7.9% 22.8% 19.9%

California 10.6% 18.8% 7.5% 21.8% 20.3%

United States 10.3% 17.6% 7.5% 20.9% 27.9% Source: EMSI Employment Complete, T. Clower & Associates In 2012, the latest year for which data are available, more than 130,000 students completed degree programs at colleges and universities across the region, an increase of 1.2%. This feeds the regional labor force and allows Southern California to remain highly competitive. This is especially true when focusing attention on science, technology, engineering, and math degree programs. Education institutions in the Biocom service area graduated over 19,200 students in STEM disciplines in 2012, a 21% increase over 2010. Total Completions by County 2011 2012 % Change San Diego 55,935 55,124 -1.5% Orange 55,402 55,354 -0.1% Riverside 16,908 19,214 13.6% Imperial 1,404 1,546 10.1% Total 129,649 131,238 1.2%

Source: EMSI Employment Complete, T. Clower & Associates STEM Completions by County 2010 2012 % Change San Diego 7,390 9,097 23.1% Orange 5,765 6,839 18.6% Riverside 2,566 3,072 19.7% Imperial 102 196 92.2% Total 15,823 19,204 21.4%


LIFE SCIENCES Southern California’s life science industry cluster provided over 110,000 jobs in 2013. As a reminder, the data reported here are not comparable to previous Biocom industry reports due to changes in industry definitions. San Diego and Orange counties dominate employment in the cluster. Forecasted employment change suggests the region will generally add jobs in this sector over the next two years with especially strong growth in San Diego County. Total average regional earnings by life science professionals exceed $75,000 per year, though there are substantial intraregional differences. Life Science Employment by County, 2012 - 2013 2012 2013 2015 2014 Avg. Earnings San Diego 47,976 48,469 51,324 $95,446 Orange 48,797 49,448 51,272 $71,169 Riverside 12,624 11,971 12,056 $45,894 Imperial 746 644 591 $32,270 Region 110,143 110,532 115,243 $78,873

Source: EMSI Employment Complete, T. Clower & Associates Life Science Employment by Sector

2012 2013 2015 BioRenewables 5,276 5,123 4,934 Biopharmaceutical Manufacturing 11,408 11,357 11,507 Medical Devices and Diagnostics 33,890 34,196 35,645 Life Science Wholesale 14,962 14,362 14,797 Research, Development, and Education Labs 44,605 45,491 48,357

Total 110,141 110,529 115,240 Source: EMSI Employment Complete, T. Clower & Associates

All Life Science Establishments, 2013 Establishments Imperial 38 Orange 1,081 Riverside 290 San Diego 1,116 Region 2,525


Wages by Sector and County, 2013

BioRenewables Biopharmaceutical Manufacturing

Medical Devices and Diagnostics

Life Science

Wholesale

Research and Lab Services

All Life Sciences

San Diego $63,212

$140,293

$95,130

$150,619

$95,446

$170,112

Orange $66,159 $74,156 $106,712 $117,096 $71,169 $24,039 Riverside $46,307 $77,101 $69,616 $65,687 $37,968 $31,876 Imperial $48,687 $0 $54,420 $45,912 $32,270 $79,971 Region $56,091 $72,888 $81,470 $94,829 $98,375 $103,374

Source: EMSI Employment Complete, T. Clower & Associates Regional Competitive Advantage Location quotients help to identify a region’s competitive industries. Southern California has strong representation in Biopharmaceutical Manufacturing, Medical Devices and Diagnostic Equipment manufacturing, and Research and Lab Services. The surprising strength of Imperial County in Medical Devices and Diagnostic Equipment manufacturing is due to employment in one sub-sector (Dental Equipment), which inflates the location quotient in this comparatively small population county. Industries with strong LQs (those greater than 1.2) are often indicative of a regional competitive advantage that would support additional growth and opportunity. Industries with low LQs (those less than 0.9) indicate goods and services that are likely imported into the region and therefore could represent opportunities for business development and recruitment.

Location Quotients by County & Industry Sector

BioRenew

ables BioPharm Manuf

Med Dev & Diagnostic Life Sci Wholesale Research Labs

Imperial 2013 12.9 4.1 0.2 1.6 2015 11.5 5.2 0.2 1.6

Orange 2013 0.5 1.6 6.4 2.1 0.9 2015 0.4 1.5 6.9 2.2 0.9

Riverside 2013 2.2 1.2 4.8 2 0.2 2015 2.1 1.3 4.6 2.1 0.2

San Diego 2013 1.3 12.2 2.1 1.4 2.7 2015 1.3 12.7 2.2 1.5 2.9


Location Quotients for Region by Industry Sector 2013 2015 BioRenewables 1.1 1.0 Biopharmaceutical Manufacturing 3.2 3.4 Medical Devices 3.8 4.0 Life Science Wholesale 0.6 0.6 Research, Development, and Education Labs 1.5 1.6 Total Life Science Industry 2.3 2.4

Source: EMSI Employment Complete, T. Clower & Associates The life science industry remains highly competitive with the overall concentration of employment being over 2 times the national average (Location Quotient 2.3). As a reminder, the location quotient compares the concentration of regional employment in a given industry to the concentration of total employment in that same industry across the nation. A shift share analysis, which examines industry growth trends by controlling for overall economic conditions and national industry trends. The expected change is the number of jobs that would be added (or subtracted) from a given industry in the study region if the local industry performed exactly to national trends. The competitive effect shows the number of increased (decreased) jobs in local industry attributable to local economic conditions. A positive competitive effect indicates local industry is outperforming national performance, a negative effect shows that other regions are performing better, at least during the time period being examined. The level of regional competitiveness during the 2010-2013 was strongest in Medical Devices and Research, Development, Education, and Laboratory Services in the Biocom service area. All Life Science Shift Share Analysis, 2010-2013 Cluster Expected Change Competitive Effect BioRenewables 52 -409 Biopharmaceutical Manufacturing 372 -279 Medical Devices and Diagnostic Equipment 350 3,507 Life Science Wholesale 111 -1,798 Research, Development, and Education Labs 1,348 1,150 Region 2,233 2,171


LIFE SCIENCE IMPACTS Based on the IMPLAN economic input-output model, the business activities in the life science industry in Southern California generates almost $80 billion in regional economy activity that supports 435,000 regional jobs paying almost $28 billion in annual salaries, wages, and benefits. Economic Impacts Economic Activity Labor Income Jobs Imperial $127,412,000 $34,397,000 1,068 Orange $35,315,031,000 $11,608,038,000 164,390 Riverside $7,402,679,000 $2,353,422,000 41,190 San Diego $31,837,530,000 $12,115,965,000 179,134 Region $79,835,031,000 $27,852,146,000 435,089


The success of the life science industry in Southern California is made possible, in part, by having strong regional linkages in key support industries. Combined, these support industries generate almost $4.7 billion in regional economic activity and boost area employment by 23,500 jobs.

Economic Activity in Key Support Industries

Industry Imperial Orange Riverside San Diego Total Acct. & Tax Prep. $156,247 $173,715,054 $19,077,584 $100,751,043 $293,699,929 Insurance $128,380 $132,047,022 $12,463,347 $92,121,941 $236,760,690 Legal Services $205,601 $347,197,641 $30,045,130 $326,055,366 $703,503,738 Business Admin. $39,081 $73,518,317 $14,750,186 $84,674,140 $172,981,724 Financial Services $1,160,663 $406,578,867 $46,789,561 $306,318,738 $760,847,829 Mktg., Ad., Comm. $54,806 $216,006,478 $28,948,381 $99,940,613 $344,950,279 Real Estate $2,925,509 $936,207,293 $243,887,406 $996,740,834 $2,179,761,042

Source: IMPLAN Employment in Key Support Industries

Industry Imperial Orange Riverside San Diego Total Acct. & Tax Prep. 3 1,261 252 872 2,387 Insurance 1 894 105 587 1,587 Legal Services 2 1,596 185 1,492 3,274 Business Admin. 0 567 142 708 1,417 Financial Services 3 763 101 630 1,496 Mktg., Ad., Comm. 1 1,652 204 761 2,617 Real Estate 16 4,072 1,456 5,210 10,754

Source: IMPLAN

RESEARCH, DEVELOPMENT, AND EDUCATION LABS Research, Development, and Education Labs in Southern California is concentrated in San Diego County with almost 28,000 of the total 45,491 jobs in this industry sector. This sector will continue to see growth through 2015 remaining concentrated in San Diego County. Interestingly, the shift share analysis suggests that San Diego is gaining most its new jobs in this cluster due to overall industry trends. Research, Development, and Education Labs Employment by County

2012 2013 2015 2013 Avg Earnings

Imperial 187 108 112 $32,270 Orange 13,823 13,986 14,641 $71,169 Riverside 3,499 3,539 3,693 $37,968 San Diego 27,099 27,862 29,912 $95,446 Region 44,608 45,495 48,358 $98,375

Source: EMSI Employment Complete, T. Clower & Associates Research, Development, and Education Labs Establishments, 2013

Establishments Imperial 9 Orange 313 Riverside 96 San Diego 508 Region 926

Source: EMSI Employment Complete, T. Clower & Associates Featured Employers: Research, Development, and Education Labs Business Name Employment The Scripps Research Institute 2,500 General Atomics 2,000 The Salk Institute 1,100 Sanford-Burnham Medical Research Institute 966 SynteractHCR 350 Millennium Laboratories, Inc. 258 Dart Neuroscience LLC 220 Irvine Pharmaceutical Services, Inc. 160 Geneohm Sciences, Inc. 150 Source: Hoover’s, Biocom Research, Development, and Education Labs contributes about $16.3 billion in regional economic activity in Southern California and supports almost 116,000 direct, indirect, and induced jobs. Economic Impacts

Economic Activity Labor Income Jobs



Imperial $15,919,000 $6,612,000 161 Orange $4,176,127,000 $1,742,948,000 29,431 Riverside $699,435,000 $273,121,000 6,668 San Diego $10,838,433,000 $4,824,706,000 76,076 Region $16,331,770,000 $7,048,902,000 115,711


BIOPHARMACEUTICAL MANUFACTURING Biopharmaceutical Manufacturing companies in Southern California have more than 11,300 employees earning almost $92,000 per year in earnings. Employment in this cluster is highly concentrated in San Diego and Orange Counties, with San Diego County having over 12 times the national average of employees in this sector of the life science industry. San Diego County is also the only county in the region that saw growth in this cluster over 2012 data, a trend expected to continue through 2015. Biopharmaceutical Manufacturing Employment by County

2012 2013 2015 2013 Avg Earnings

Imperial 0 0 0 $0 Orange 4,381 4,278 3,976 $75,639 Riverside 1,230 1,141 1,094 $148,672 San Diego 5,797 5,938 6,437 $143,099 Region 11,408 11,357 11,507 $91,853

Source: EMSI Employment Complete, T. Clower & Associates Featured Employers: Biopharmaceutical Manufacturing Business Name Employees CareFusion 4,000 Vertex Pharmaceuticals 800 Questor Pharmaceuticals, Inc. 703 Access Business Group International LLC 700 Quidel Corporation 600 Isis Pharmaceuticals, Inc. 365 Prometheus Laboratories Inc. 300 Inova Diagnostics 250 Ajinomoto Althea 246 BioLegend, Inc. 176 Source: Hoovers, Biocom Biopharmaceutical Manufacturing Establishments, 2013


Source: EMSI Employment Complete, T. Clower & Associates Biopharmaceutical Manufacturing related business activities boost total economic activity in Southern California by $27.3 billion annually. Labor income increase by about $7.8 billion through the more than 105,000 area jobs related directly or indirectly to this industry cluster.



Economic Impacts

Economic Activity Labor Income Jobs Imperial -- -- -- Orange $11,627,483,855 $2,886,948,377 37,431 Riverside $2,880,007,800 $667,450,265 10,072 San Diego $10,906,406,481 $3,550,712,172 47,011 Region $27,212,590,299 $7,758,865,733 105,084


MEDICAL DEVICES AND DIAGNOSTIC EQUIPMENT The Medical Devices and Diagnostic Equipment manufacturing cluster of the life science industry employees over 34,000 workers in the four-county region represented by Biocom. This cluster, which largely resides in Orange and San Diego counties, has seen overall growth in employment. However, a review of county level data shows a mixed picture with Orange and San Diego counties growing, but Riverside County losing jobs. Over the next two years, Orange and San Diego counties will see continued growth in this cluster. Medical Devices and Diagnostic Equipment Employment by County

2012 2013 2015 2013 Avg Earnings



Major Employers: Medical Devices and Diagnostic Equipment Business Name Employees

Djo Global, Inc. 1,792 Illumina, Inc. 1,700 Edwards Lifesciences Corporation 1,600 ThermoFisher 1,300 James R. Glidewell Dental Ceramics, Inc. 1,100 Hologic 760 Quantum Magnetics, Inc. 609 GenOptix 575 Dexcom, Inc. 570 Nexus Dx, Inc. 480 NuVasive 450 AlphaTecSpine 305 Source: Hoover’s, Biocom



Medical Devices and Diagnostic Equipment Establishments, 2013 Establishments

Imperial 3 Orange 307 Riverside 59 San Diego 214 Region 583

Source: EMSI Employment Complete, T. Clower & Associates The Medical Devices and Diagnostic Equipment manufacturing clusters delivers over $21 billion in total economic activity to the Southern California economy supporting over 102,000 jobs that pay in excess of $7.4 billion in salaries, wages, and benefits Economic Impacts Economic Activity Labor Income Jobs Imperial $8,770,854 $2,743,831 59 Orange $14,787,771,975 $5,111,790,086 69,022 Riverside $654,147,110 $229,008,799 3,539 San Diego $5,910,701,631 $2,110,875,619 29,834 Region $21,361,391,570 $7,454,418,335 102,454


BIORENEWABLES The BioRenewables cluster of the life science industry employed 5,100 workers in 2013, a decline from 2012 and reflecting a trend projected to continue through 2015. Riverside County bucked the overall trend and showed modest growth. BioRenewables Employment by County

2012 2013 2015 Avg. Earnings

2013 Imperial 485 493 432 $48,687 Orange 932 911 804 $66,159 Riverside 1,465 1,495 1,482 $46,307 San Diego 2,395 2,224 2,215 $63,212 Region 5,277 5,123 4,933 $56,091

Source: EMSI Employment Complete, T. Clower & Associates Featured Employers: BioRenewables Business Name Employees

American Vanguard Corporation 499 Euroamerican Propagators, LLC 200 BP BioFuels 150 Synthetic Genomics 130 BASF 100 Genomatica 100 Veredezyne 54 Source: Hoover’s, Biocom BioRenewables, 2013


Source: EMSI Employment Complete, T. Clower & Associates The BioRenewables cluster, though smaller in total scale than other industry clusters, still generates almost $3 billion in economic activity for Southern California supporting over 12,700 jobs. Economic Impacts



Economic Activity Labor Income Jobs Imperial $96,889,540 $23,304,518 813 Orange $894,315,118 $187,504,332 2,835 Riverside $838,235,471 $277,896,438 4,951 San Diego $1,833,574,596 $538,274,389 8,050 Region $2,973,429,056 $663,299,472 12,703


LIFE SCIENCE WHOLESALE Employment in the Life Science Wholesale cluster has been on a declining trend, but still represents over 14,300 regional jobs. Our outlook does show this cluster will stabilize and grow slightly over the next two years. Given the competitive effect of the shift share analysis shows a loss that is much lower than actual cluster job losses, the companies in Life Science Wholesale are experiencing external challenges and we conclude that the Biocom region remains competitive for this type of business. Life Science Wholesale Employment by County

2012 2013 2015 2013 Avg Earnings



Featured Employers: Life Science Wholesale Business Name Employees

Pacific Pharma Inc. 2,000

Professional Hospital Supply, Inc. 1,200

Allergan Sales, LLC 600

Apria Healthcare LLC 400

OptumRx, Inc. 300

Gordian Medical, Inc. 290

Signal Pharmaceuticals, LLC 134

Horiba Instruments Inc. 108

FFF Enterprises, Inc. 100

Southwood Pharmaceuticals 100

Cameron Health, Inc. 100 Source: Hoover’s, BayBio



Life Science Wholesale Establishments, 2013 Establishments

Imperial 4 Orange 381 Riverside 85 San Diego 240 Region 710

Source: EMSI Employment Complete, T. Clower & Associates The Life Science Wholesale cluster supports more than 51,000 jobs in the regional economy boosting economic activity by $8.2 billion. Economic Impacts Economic Activity Labor Income Jobs Imperial $4,478,013 $2,023,593 36 Orange $4,434,521,125 $1,879,308,658 25,671 Riverside $979,555,390 $426,874,416 7,563 San Diego $2,799,690,420 $1,238,536,655 18,163 Region $8,218,244,948 $3,546,743,322 51,433


Foreign Trade Biocom supports its members’ ability to expand and grow their markets domestically and internationally. The importance of extending markets globally and actively pursuing research and commercial collaborations with international partners is necessary for future success. Based on data from the IMPLAN model, the region exported almost $8.3 billion in life science goods and services in 2013

Value of Foreign Exports by Sector and County

Sector Imperial Orange Riverside San Diego Total BioRenewables

$972,704 $209,080,393 $43,389,802 $252,865,194 $506,308,092

Biopharmaceutical Manufacturing $0 $755,623,386 $215,801,772 $529,463,572 $1,500,888,729

Medical Devices and Diagnostics $1,450,764 $1,737,114,140 $361,168,958 $705,410,943 $2,805,144,805

Life Science Wholesale $27,379,763 $1,891,938,672 $318,594,501 $869,715,183 $3,107,628,119

Research, Development, and Education Labs

$114,841 $23,940,964 $2,618,566 $34,9285,721 $375,960,092

Total $29,918,072 $4,617,697,555 $941,573,599 $2,706,740,613 $8,295,929,837

Source: IMPLAN, T. Clower & Associates

Venture Capital and Research Funding 2013 proved to the a challenging year for attracting venture capital investments to Southern California with totals falling below recent years. Research funding from the National Institute of Health continues to boost research and development that has always drive Southern California’s life science industry. In fiscal year 2013, Southern California companies, universities, and institutions received about $939 million in NIH research funding. San Diego Region Venture Capital Investment, 2008 - 2012

Source: National Venture Capital Association, Money Tree Report Q4 2012

National Institute of Health (NIH) Funding by County, 2013 COUNTY NIH Funding 2013

ORANGE $137,078,261 RIVERSIDE $17,055,554 SAN DIEGO $784,742,402 IMPERIAL $0 REGION $938,876,217

Source: NIH

$0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010 2011 2012 2013

FY 2013 Top Grant Receiving Institutions (at least $1 million in funding) Organization Funding Awards UNIVERSITY OF CALIFORNIA SAN DIEGO $362,004,733 847 SCRIPPS RESEARCH INSTITUTE $198,275,639 335 UNIVERSITY OF CALIFORNIA IRVINE $126,433,097 340 SANFORD-‐BURNHAM MEDICAL RESEARCH INSTIT $53,588,265 123 SALK INSTITUTE FOR BIOLOGICAL STUDIES $41,115,822 83 SAN DIEGO STATE UNIVERSITY $26,533,223 80 LA JOLLA INST FOR ALLERGY & IMMUNOLGY $26,164,807 54 UNIVERSITY OF CALIFORNIA RIVERSIDE $15,835,300 58 PAXVAX, INC. $12,079,618 3 VETERANS MEDICAL RESEARCH FDN/SAN DIEGO $9,335,440 22 LUDWIG INSTITUTE FOR CANCER RES LTD $8,346,016 16 MAPP BIOPHARMACEUTICAL, INC. $5,735,312 3 TRIUS THERAPEUTICS, INC. $3,624,974 1 CALIFORNIA STATE UNIVERSITY FULLERTON $2,895,311 12 CALIFORNIA STATE UNIVERSITY SAN MARCOS $2,434,018 12 PROGNOSYS BIOSCIENCES, INC. $1,969,762 4 LA JOLLA BIOENGINEERING INSTITUTE $1,714,550 2 AMPLYX PHARMACEUTICALS, INC. $1,581,107 5 VALA SCIENCES, INC. $1,384,880 4 VENTRIX, INC. $1,339,549 1 OPTIMUM THERAPEUTICS, LLC $1,336,756 4 OCT MEDICAL IMAGING, INC. $1,237,009 2 GENALYTE, INC. $1,224,338 2 IMMPORT THERAPEUTICS, INC. $1,080,873 2

Source: NIH

APPENDIX NAICS Industry Description

BIORENEWABLES (INCLUDING BIOFUELS, SPECIALTY ENZYMES CHEMICALS, ALGAE RESEARCH AND AGRICULATURE) 111000 Crop Production (15%) 113210 Forest Nurseries and Gathering of Forest Products (15%) 311221 Wet Corn Milling 311222 Soybean Processing 311223 Other Oilseed Processing 325193 Ethyl Alcohol Manufacturing 325199 All Other Basic Organic Chemical Manufacturing 325221 Cellulosic Organic Fiber Manufacturing 325311 Nitrogenous Fertilizer Manufacturing 325312 Phosphatic Fertilizer Manufacturing 325314 Fertilizer (Mixing Only) Manufacturing 325320 Pesticide and Other Agricultural Chemical Manufacturing BIOPHARMACEUTICAL MANUFACTURING 325411 Medicinal and Botanical Manufacturing 325412 Pharmaceutical Preparation Manufacturing 325413 In-Vitro Diagnostic Substance Manufacturing 325414 Biological Product (except Diagnostic) Manufacturing MEDICAL DEVICES AND DIAGNOSTIC EQUIPMENT 327215 Glass Product Manufacturing Made of Purchased Glass (20%) 333314 Optical Instrument and Lens Manufacturing (10%0 334510 Electromedical and Electrotherapeutic Apparatus Manufacturing 334513 Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling

Industrial Process Variables (3%) 334516 Analytical Laboratory Instrument Manufacturing 334517 Irradiation Apparatus Manufacturing 339112 Surgical and Medical Instrument Manufacturing 339113 Surgical Appliance and Supplies Manufacturing 339114 Dental Equipment and Supplies Manufacturing 339115 Ophthalmic Goods Manufacturing 339116 Dental Laboratories LIFE SCIENCE WHOLESALE 423450 Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers 424210 Drugs and Druggists' Sundries Merchant Wholesalers (82%) RESEARCH AND LAB SERVICES 541380 Testing Laboratories (10%) 541711 Research and Development in Biotechnology 541712 R & D in the Physical, Engineering, and Life Sciences (except Biotechnology) (5%) 611310 Colleges, Universities, and Professional Schools (Private) (25%) 621511 Medical Laboratories 902612 Colleges, Universities, Professional Schools (State Government) (25)% 903612 Colleges, Universities, Professional Schools (Local Government) (10)%

DATA SOURCES Data for this analysis come from a variety of sources. The primary source of demographic and employment data is Economic Modeling Specialists, Incorporated (EMSI). This company uses data from the US Bureau of Labor Statistics (BLS), US Census Bureau, and other sources to provide detailed estimates of employment by industry, worker earnings, business establishments, and market area demographics. The key value added by this data provider is their use of proprietary algorithms that estimate data masked by BLS to protect individual company confidentiality.

Commercial biotechnology and pharmaceutical content in this was supplied by Evaluate, Ltd. Evaluate transforms life science market intelligence into insights companies can use to perform well. Its services include: EvaluatePharma®, EvaluateMedTech™ and EvaluateClinical Trials™. Its award-winning editorial team is EP Vantage.. In addition, we draw data from Hoover’s, the National Center for Education Statistics, the IMPLAN economic input-output model, PWC’s MoneyTree report, and other sources

SPECIALIZATION AND REGIONAL COMPETITIVENESS A high level of specialization fosters synergy and collaboration as though knowledge is “in the air.” An effective and commonly used economic base technique to measure a region’s specialization is the location quotient (LQ). This study utilizes employment as its unit of measure for assessing the Location Quotients by cluster, region, and county. The proportional employment in a selected industry for the study area is compared to a reference area, in this case, national employment.

The arithmetic nature of an LQ leads to the following rules of LQ evaluation:

• LQ>1 is interpreted as the region being more specialized than the nation in the particular industry.

• LQ<1 is interpreted as the region being less specialized than the nation in the particular industry.

• LQ=1 is interpreted as the region having an equal degree of specialization when compared with the nation in the particular industry.

Industries with strong LQs (those greater than 1.2) are often indicative of a regional competitive advantage that would support additional growth and opportunity. Industries with low LQs (those less than 0.9) indicate goods and services that are likely imported into the region and therefore could represent opportunities for business development and recruitment.

Shift share is a second economic analysis technique used to highlight the region’s competitive advantages and disadvantages. It is useful for recognizing established or emerging strengths and weaknesses in local regions taking into account non-local market conditions such as overall economic trends and industry trends not tied to local conditions. In this report, we focus on two outputs of a shift share analysis:

• Expected Change: Job growth one would expect in the regional industry if it followed national trends for the overall economy and national trends for that particular industry.

• Competitive Effect: This explains how much of the change in a given industry is due to a unique competitive strength, or weakness, that the region possesses. It is the difference between Expected Change and Actual Change.

ECONOMIC IMPACT The analysis of the economic impact of the life science industry incorporates data primarily provided by EMSI* and the IMPLAN* input-output model. These estimates of total economic activity include direct, indirect, and induced impacts based on the activities of a given industry. An example to consider is the economic impact of biopharmaceuticals. The direct effects capture spending in the subject industry for employees, materials, supplies, utilities, equipment, and professional services as part of normal business operations. Indirect effects capture the economic activities of the company’s vendors. For instance, the accounting firm that provides bookkeeping services buys office supplies, rents office space, purchases computer equipment, and hires services for its business needs. Induced effects include the impact of the employees of all these firms spending a portion of their wages and salaries in the local economy. At each stage, the model accounts for spending that leaves the local area, such as spending for imported (domestic or foreign) raw materials. When added together, the adjusted total impacts are often large than direct spending by industry firms, which is the “multiplier” effect. Data used to build the IMPLAN economic input-output model also allows us to estimate the value of foreign exports of commodities and services related to the life science industry.

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